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MARKET CLOSE: NZ shares rise; Heartland gains on profit lift

MARKET CLOSE: NZ shares rise as Heartland gains on profit upgrade

By Paul McBeth

Jan. 28 (BusinessDesk) - New Zealand shares rose to a new record, led by Heartland New Zealand after the bank said it expected to post bigger earnings this year as it grows its asset base. Stocks with stable dividends also gained, including Spark New Zealand and Contact Energy.

The NZX 50 index advanced 57.085 points, or 1 percent, to 5794.823, a new record close. Within the index, 29 stocks gained, 15 fell, and six were unchanged. Turnover was $131.4 million.

Heartland rose as high as $1.30, and closed the day up 5.9 percent to $1.26. The Christchurch-based lender said first-half profit rose to between $23 million and $24 million in the six months ended Dec. 31 from $16.7 million a year earlier, and lifted forecast annual earnings to between $46 million and $48 million, reflecting growth in its assets. It had previously forecast annual earnings of between $42 million and $45 million.

"Heartland came out with an earnings upgrade and we've now got that stock trading at its highest level," said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch.

Williamson said New Zealand's market continued to attract investors seeking high dividend yields as global interest rates look set to stay lower for longer.

Spark, which trades at a 5.01 percent gross dividend yield, rose 3.1 percent to $3.495, while Contact Energy, with a yield of 3.83 percent, rose 4.7 percent to $7.10. Petrol station chain Z Energy, which trades at a yield of 4.57 percent, gained 2.3 percent to $4.92.

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"It's another big yield-chasing day today," Williamson said. "Dividend yields on the defensive stocks are still a reasonable premium to the interest rate market."

The NZX All Index, a capital measure of domestic equities, is at a dividend yield of 4.76 percent, compared to a yield of 3.345 percent on the benchmark 10-year government bond.

Other stocks to gain included glass manufacturer Metro Performance Glass, up 3.6 percent to $2, retirement village operator Ryman Healthcare which rose 2.5 percent to $8.35 and Vital Healthcare Property Trust, which increased 3.8 percent to $1.64.

Fisher & Paykel Healthcare Corp, the breathing respirator manufacturer which derives most of its income from overseas, gained 1.6 percent to $6.26. The kiwi dollar has been trading near three-year lows against the greenback in recent days ahead of tomorrow's central bank decisions in the US and New Zealand, benefitting exporters when they switch their income back to the local currency.

A2 Milk Co was unchanged at 57 cents after the company's shareholders yesterday approved change to its constitution to enable a dual-listing on the ASX. Units in the Fonterra Shareholders' Fund fell 0.3 percent $5.85 while Synlait Milk gained 6.4 percent to $3.35.

NZX rose 0.9 percent to $1.17 after the stock market operator signed a memorandum of understanding with market watchdog the Financial Markets Authority to formalise how they work together in monitoring the local market.

Fletcher Building, the biggest company on the exchange, fell 0.5 percent $8.32.

Exploration firm New Zealand Oil & Gas led decliners, falling 1.6 percent to 62 cents. Skellerup Holdings, the rubber goods maker, dropped 1.5 percent to $1.33.

Goodman Property Trust declined 0.4 percent to $1.17 after the property investor said it had received Overseas Investment Office approval to bring in Singapore sovereign fund GIC to co-invest in Auckland's Viaduct Quarter.

Trade Me Group slipped 0.3 percent to $3.75, on bigger than usual turnover of $28.3 million. Some 7.55 million shares in the online auction site changed hands, compared to the 90-day average of some 940,000.

NZAX-listed VMob, the mobile discount voucher firm, 5.3 percent to 1.8 cents. The Financial Markets Authority today said it was looking at the company's disclosures earlier this week when it unveiled a global deal with McDonald's and then later announced a $2.17 million private placement, which certain directors participated in.

(BusinessDesk)

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